Published On: Fri, Apr 20th, 2018

Unfolding the luxury market in Dubai: UAE’s largest Emirate

To the world outside, the United Arab Emirates is synonymous with luxurious lifestyle and flashy display of wealth. It is defined by various common assumptions – the shores are lined up with private yachts, owned by people who wear piles of gold and diamonds, and have pet cheetahs living freely inside their private mansions. For the outsider, UAE means opulent living in its gleaming skyscrapers, seven-star hotels, swanky expansive malls, and indoor ski resorts.

In the past decade, the UAE’s luxury shopping market has seen a tremendous change. According to Bain & Co’s Annual Luxury Goods Report in 2015, the growth of the Middle East personal luxury goods market had flat lined, after a few years of tremendous growth. The country though, still leads GCC’s luxury market, and Dubai has maintained to be one of the most leading travel destinations in the world.

A drastic impact on the local luxury shoppers in the country is the introduction of VAT and the new tax regime, introduced in 2017. With the onset of internet marketing, top global brands have witnessed a shift towards the e-commerce market. The luxury goods e-commerce market alone is forecast to reach AED185 million ($185 million) in value terms by 2020.

Dubai continues to be a hot spot pictured/Dubai Mall, the largest mall in the world photo/Alberto G Rovi via wikimedia commons

Spending on Luxury Products and Services in the UAE

Following the survey conducted by the American Express among 125 participants in the UAE, it was concluded that citizens and expats living there spend an average of AED 7,000 per month on luxury products and services.  

Graziela Martins, Vice President of the Merchant Business at American Express Middle East and North Africa (MENA) said that as respondents earned at least Dh 23,000 per month, it meant that they intend to spend a whopping 30 per cent of their income on luxury items this year. However, few families in the UAE had stated in an interview conducted by gulfnews.com that after the introduction of VAT, they have stopped impulsive shopping to manage their budget.

A huge chunk of Dubai’s luxury market is contributed by countries like India and China. In 2016, about 1.6 million people visited Dubai from India alone, which shows a 26 per cent year-on-year increase.  Majid Al Futtaim Group stated that Chinese tourists are responsible for up to 25 percent of luxury sales in the Mall of the Emirates. Deepak Talwar stated in his presentation at a MEDFA Conference that Indians are “incredible shopaholics”. He also emphasized that there were 1.75 million Indians in Dubai, contributing a fair growth in the Middle East. India has ranked on top in Dubai’s list of source markets for inbound tourism.

Dubai’s Contribution in the Luxury Market

The luxury market in Dubai commands around 30 per cent of the Middle East luxury market, and around 60 per cent in the UAE. Cyrille Fabre, partner at Bain & Company, highlighted the importance of Dubai as a spending hub.  He said, “Dubai is successfully gathering momentum to establish itself as a global hub for shopping… It’s already part of the top 15 luxury markets.”

“While Paris, London, Milan, New York, Hong Kong and Singapore are also popular among the people of the Middle East, the UAE still ranks as the hot favorite, with 21 per cent people saying they are most likely to shop at a mall in Dubai,” she revealed. The increasing number of overseas visitors in the Emirates hustled to an increase in the footfalls in malls and outlets across the UAE.

According to Dubai Tourism strategy 2020, the focus is on making Dubai the ‘first choice’ for the international leisure and business traveler. There are also further plans by the government to attract 600,000 Chinese tourists by the year 2021.

The UAE is built on foundations that are rich in history and tradition. The country has doubled its GDP with non-oil sectors contributing to its economy. It is an anticipating society, which while being bound to its culture and heritage, has envisioned its future. It has the advantage of being at a geographically strategic location, nestled between the East and the West. Not to forget, it’s a short-haul travel from China and India, to stop-over tourism for long-haul trips between Africa, Asia and Europe. This is why the UAE has been able to build and maintain its reputation of being an exquisite destination for anyone who aspires to live in the lap of luxury.

Author: Jacob Maslow

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